Charge on cash deposit: Why blame the banks when RBI approved move
One of the reasons could be the rise in cash withdrawals since January 2017. RBI data show that people have already started withdrawing cash from their bank accounts in large numbers which has led to slowdown in digital transactions.
Demonetisation led to Government asking banks to do away with cash deposit and withdrawal fee. However, these fee are now making a come back.
HDFC Bank on March 02, 2017, said it would henceforth charge cash withdrawal and deposit. Other banks like ICICI Bank, Axis Bank and State Bank of India soon followed suit.
What are the banks charging?
State Bank of India: The bank said that account holders can deposit cash three times a month free of charge, post that a fee of Rs 50 plus service tax for every transactions will be charged, effective from April 01, 2017.
Axis Bank: First five transactions each month will be free and the bank will charge Rs 95 per transaction after that for both deposits and withdrawals.
HDFC Bank: After every four free transactions (both deposits or withdrawals), HDFC Bank will charge Rs 150 per transaction on savings account holders and also salary accounts holders.
ICICI Bank: ICICI Bank will allow four free transactions after which it will charge Rs 5 per Rs 1000 subject to a maximum of Rs 150 in one month.
Intention for this move is to promote PM Modi-led government's digital economy and disincentivising use of cash.
Regulatory rules:
As per the Reserve Bank of India's (RBI) policy, banks are allowed to provide a certain number of transactions free of cost to customers every month.
In the year 2014, RBI changed eligibility for transaction up to three instead of 5 free transactions for metro cities.
After the free transactions, a nominal fee will be charged per transaction which can be decided by banks with maximum fee of Rs 20 per transactions, RBI had said.
Here's what banks are charging on cash transactions through ATMs.
RBI data show that Indians are rushing to withdraw cash as demonetisation pain eases
In terms of volume, usage of debit and credit cards at point-of-sale (POS) terminals has declined from an average of 10 million per day in December 2016, to 8.6 million in January 2017 and latest to 7.8 million per day in February 2017.
From its peak of 31 million transactions per day in December 2016, the overall digital transactions have declined to 28 million transactions per day in February 2017.
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